Barnes & Noble Looks Ahead As Losses Widen

Barnes & Noblereleased fiscal fourth-quarter 2016 results Wednesday after the market close. Shares of the bookseller bounced almost 6% in after-hours trading in response, practically recouping the stock's similar decline during the regular session leading into the report. Let's look at what Barnes & Noble accomplished in its latest quarter.

Barnes & Noble results: The raw numbers

Metric

Fiscal Q4 2016 Actuals

Fiscal Q4 2015 Actuals

Growth (YOY)

Revenue

$876.7 million

$910.1 million

(3.7%)

Net income (loss) from continuing operations

($30.6 million)

($3.0 million)

N/A

EPS (loss) from continuing operations

($0.42)

($0.12)

N/A

Data source: Barnes & Noble.

What happened with Barnes & Noble this quarter?

Advertisement

Earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at a loss of $26 million, a figure that includes a previously disclosed $20.9 million pension settlement charge.

Barnes & Noble's quarterly net loss from continuing operations excluding that charge would have been $17.8 million, or $0.24 per share.

Retail sales fell 2.2% year over year, to $850 billion, primarily because of lower online sales and store closures.

That brought full-year core comparable-store sales growth of 0.4%, slightly below guidance provided last quarter for the metric to rise 1% for the full year.

Retail EBITDA came in at a loss of $11.1 million, including the pension settlement charge. Excluding the charge, retail EBITDA would have been $9.8 million, representing a $23.3 million decline from the same year-ago period, driven by a combination of lower sales, increased promotions, and higher store wages and benefits.

Nook sales fell 33.3%, to $51.7 million.

Nook EBITDA losses were $14.9 million, including roughly $4 million of expenses for further cost structure rationalization activities.

Full-year Nook EBITDA losses narrowed to $64.7 million, compared with a loss of $83.9 million last fiscal year.

The company paid $11.3 million in dividends and repurchased 964,000 shares for $10.2 million (or an average price of $10.61 per share).

What management had to say

Barnes & Noble CEO Ron Boire stated:

Looking forward

For the full fiscal year 2017, Barnes & Noble anticipates comparable-store sales to fall within a range of roughly flat to a 1% increase over fiscal 2016. That should translate to consolidated EBITDA of $200 million to $250 million, including retail EBITDA of $240 million to $280 million, and narrowing Nook EBITDA losses, to a range of $30 million to $40 million, including transitional costs.

While this guidance might not seem impressive on the surface, it does represent notable improvement, as Barnes & Noble works to narrow its Nook losses and return its overall business to sustained growth and profitability. Though retail comps this quarter were a point of concern, Barnes & Noble should be able to appease investors if it's able to deliver on its promise for continued progress in the coming fiscal year.